Many of the world’s largest shipping nations agreed on Friday to what is effectively the first-ever global tax on greenhouse gas emissions for the industry, the International Maritime Organization (IMO) said.
At a meeting in London, they decided to impose a minimum fee of $100 for every ton of greenhouse gases emitted by cargo ships above certain thresholds.
The European Union (EU), Brazil, China, India, and Japan all voted in favor of the agreement. Major oil producers, Russia, the United Arab Emirates, and Saudi Arabia voted against it, while the United States abstained from voting.
Shipping accounts for almost 3% of global greenhouse gas emissions, according to the IMO.
How will global pricing help curb maritime emissions?
Most of the world’s 100,000 cargo ships are still powered by highly polluting diesel.
The agreement, set to be implemented by 2027, requires cargo ships to use a less carbon-intensive fuel mix or face financial penalties.
The revenue from the fees, estimated at around $10 billion annually, will go into the IMO’s net zero fund to invest in fuels and technologies needed to transition to green shipping.
The agreement also provides support to developing countries to encourage their transition to lower CO2 emissions in shipping. There will also be a “reward” for those reaching zero or near-zero greenhouse gas emissions.
The IMO aims to cut total annual emissions of greenhouse gases by 50% by mid-century to meet the Paris Agreement goal of a maximal 1.5 C (2.7 F) rise in the average global temperature compared with the pre-industrial era.
US threatens ‘reciprocal measures’
The agreement was reached despite several objections. On Wednesday, a US State Department spokesperson said Washington would not be “engaging in negotiations” since US President Donald Trump’s administration wanted to put US interests first in the “development and negotiation of any international agreements.”
It also threatened “reciprocal measures” to offset any fees charged to US ships.
Environmental groups described the deal as “groundbreaking.”
“[It] should signal a turning of the tide on greenhouse gases from global shipping,” Mark Lutes, senior advisor of the World Wildlife Fund for Nature, said.
“However, key aspects of this agreement fall short of what is needed and risk blowing the transition off course,” he added.
Island nations in the Pacific and Caribbean, vulnerable to the effects of climate change, did not vote for the deal as it was not ambitious enough to reach decarbonization goals.
Edited by: Louis Oelofse